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BG teams up with Keystone



By Upstream staff 

Shares in Gulf Keystone shot up 19% today after the oil explorer said UK player BG Group had agreed to become a partner in a venture to explore for gas in central Algeria.

Gulf Keystone president Bill Guest said exploration would begin immediately in the 18,000 square kilometre Hassi Ba Hamou Perimeter, adding that independent analysis had already estimated the presence of around 1 trillion cubic feet of gas.

"The new exploration project could increase that figure substantially if successful," said Guest told Reuters in a telephone interview.

Guest said BG would help Gulf Keystone with operational costs in a deal that will see BG acquire 49% of Gulf Keystone's interest in the field and become operator.

Spending on exploration will rise to £57 million ($107 million), from an original estimate of £13 million, as a result of the deal with BG, he said, without disclosing how the costs would be shared.

One analyst said the involvement of BG suggested there are more available reserves than those already discovered, and described it as a "very sweet deal" for Gulf Keystone.

Shares in Gulf Keystone were up 19.3% at 68 pence at 1148 GMT, valuing the company at £173 million.

The analyst said there was an element of recovery in the share price, which fell by about a third in February when the company said returns from an oil block in Algeria, Block 126a, would be lower than were previously estimated.

Guest said the company had been working closely with the Algerian government over the last 18 months to allay fears that foreign companies would "simply come in and make rapid returns."


Friday, 04 August, 2006, 13:16 GMT  | last updated: Friday, 04 August, 2006, 13:19 GMT

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